Technology and Social Change
Lecture 2: Technology and Markets
Puzzle
The Productivity-Conflict Paradox
Across history, technological breakthroughs have been associated with increases in productivity and wealth.
Yet they simultaneously generated:
- Mass displacement and immiseration
- Political upheaval and labor unrest
- New forms of social vulnerability
Central Puzzle: Why does technological change, which raises aggregate productivity and wealth, so often generate social dislocation, conflict, and vulnerability?
Intro
The Analytical Challenge
How does technology reshape social and economic relations?
To answer this, we require an analytical framework capable of:
- Explaining how technological change alters market organization
- Identifying when technological innovation produces social harm versus social benefit
- Accounting for recurring patterns of political and institutional response
- Linking micro-level economic changes to macro-level social outcomes
Intro
Learning Objectives
By the end of this lecture, you will be able to:
- Use Polanyi’s theory of embeddedness to analyze the social consequences of technological change
- Identify processes of fictitious commodification in both historical and contemporary cases
- Trace the causal logic of the double movement linking markets and social protection
- Compare how different technological eras generate distinct but structurally similar institutional responses
Conceptual Framework
Conceptual Framework
Karl Polanyi: An Analytical Model
Karl Polanyi (1886–1964) developed a systematic theory of market-society relations.
His framework in The Great Transformation (1944) provides:
- A typology of economic organization (embedded vs. disembedded)
- A theory of commodification and its limits
- A dynamic model of societal response (the double movement)
This constitutes not merely historical description, but a general theory of technological change.
Conceptual Framework
Polanyi’s Core Thesis
Important
Thesis: The attempt to organize society around self-regulating markets constitutes a utopian project that, if pursued, would destroy the human and natural substance of society.
Implication for technology:
Technological change becomes socially destructive when it enables or accelerates the commodification of non-commodities.
FIGURE 1 — The Embeddedness Spectrum
EMBEDDED ECONOMY DISEMBEDDED ECONOMY
│ │
▼ ▼
┌─────────────────────┐ ┌─────────────────────┐
│ SOCIETY │ │ MARKET │
│ ┌───────────────┐ │ │ ┌───────────────┐ │
│ │ MARKET │ │ →→→ │ │ SOCIETY │ │
│ │ (regulated) │ │ Transformation │ │ (subordinated)│ │
│ └───────────────┘ │ │ └───────────────┘ │
│ │ │ │
│ Markets operate │ │ Society reorganized│
│ within social │ │ to serve market │
│ constraints │ │ imperatives │
└─────────────────────┘ └─────────────────────┘
Constraints: Characteristics:
• Social norms • Price mechanism dominant
• Moral values • Social relations commodified
• Political regulation • Institutional subordinationCore Mechanisms
Core Mechanisms
Mechanism 1: Embeddedness and Disembedding
Definition: An economy is embedded when economic transactions are subordinate to social relations, norms, and political decisions.
Disembedding occurs when:
- Market logic escapes social constraints
- Price mechanisms supplant reciprocity and redistribution
- Economic imperatives override social obligations
Critical Insight: Technology does not cause disembedding directly. Rather, it creates conditions of possibility that actors exploit to expand market relations.
FIGURE 2 — Mechanism of Disembedding
TECHNOLOGICAL CHANGE
│
▼
┌────────────────────────┐
│ New productive │
│ possibilities │
└───────────┬────────────┘
│
┌───────────────┼───────────────┐
▼ ▼ ▼
┌──────────┐ ┌──────────────┐ ┌──────────────┐
│ Capital │ │ State actors │ │ Ideological │
│ interests│ │ seeking │ │ entrepreneurs│
│ │ │ revenue/power│ │ │
└────┬─────┘ └──────┬───────┘ └──────┬───────┘
│ │ │
└────────────────┼─────────────────┘
▼
┌────────────────────────┐
│ PRESSURE TO │
│ COMMODIFY │
└───────────┬────────────┘
│
▼
┌────────────────────────┐
│ DISEMBEDDED MARKET │
│ RELATIONS │
└────────────────────────┘Core Mechanisms
Mechanism 2: Fictitious Commodification
Definition: A fictitious commodity is something that functions as a commodity in market exchange but was not produced for sale.
Polanyi identified three foundational fictitious commodities:
| Fictitious Commodity | Actual Nature | Social Harm from Commodification |
|---|---|---|
| Labor | Human life and activity | Exploitation, alienation, precarity |
| Land | Nature and territory | Environmental destruction, displacement |
| Money | Social convention | Financial instability, speculation |
Warning
Paradox: Markets require labor, land, and money to function as commodities. But treating them as true commodities destroys the social and natural foundations upon which markets depend.
Core Mechanisms
Mechanism 3: The Double Movement
Definition: The double movement describes the dialectical relationship between market expansion and social protection.
First Movement: Extension of market relations into previously non-market domains
Second Movement: Societal counter-mobilization to protect against market harms
This is not anti-progress but a self-protective response inherent to market societies.
FIGURE 3 — The Double Movement Dynamic
THE DOUBLE MOVEMENT
TIME ──────────────────────────────────────────────────────────►
FIRST MOVEMENT SECOND MOVEMENT
(Market Expansion) (Social Protection)
│ │
▼ ▼
┌─────────────────┐ ┌─────────────────┐
│ • Commodification│ │ • Labor laws │
│ • Deregulation │ → │ • Social │
│ • Privatization │ │ insurance │
│ • Technological │ │ • Environmental │
│ disruption │ │ regulation │
└────────┬────────┘ └────────┬────────┘
│ │
▼ ▼
┌─────────────────┐ ┌─────────────────┐
│ SOCIAL HARM │ → │ INSTITUTIONAL │
│ accumulates │ triggers│ RESPONSE │
└─────────────────┘ └─────────────────┘
│ │
│ ┌─────────┐ │
└─────────►│ TENSION │◄──────┘
│ & CYCLES│
└─────────┘
The cycle continues: new technologies enable new forms of
market expansion, generating new harms and new protections.Core Mechanisms
Complete Polanyian Mechanism
Important
Causal Chain:
Technological Change → Market Expansion Opportunity → Fictitious Commodification → Social Harm Accumulation → Political Mobilization → Protective Counter-Movement → New Institutional Equilibrium
This sequence provides a predictive framework for analyzing any technological transition.
Historical Case: The Enclosure Movement
Historical Case
Case Overview
Period: 1750s–1850s (Parliamentary Enclosure era in England)
Technology: Agricultural improvements (crop rotation, selective breeding, drainage)
Institutional Change: Privatization of common lands (“enclosure”)
Outcome: Mass displacement, proletarianization, welfare state emergence
Historical Case
Pre-Enclosure: Embedded Land Relations
Before enclosure, land relations were characterized by:
- Common rights: Peasants could graze animals, gather wood, fish
- Reciprocal obligations: Lords provided protection; peasants provided labor
- Non-market allocation: Access based on custom, not purchase
Land was embedded in a moral economy of mutual obligation.
Historical Case
The Enclosure Process
First Movement (Market Expansion):
- Agricultural technology increased potential productivity
- Landlords sought to capture gains through consolidated holdings
- Parliamentary acts authorized privatization of commons
- Land became alienable property—a commodity
Fictitious Commodification of Land:
Land is not a commodity because it was not produced for sale, its “supply” cannot respond to price signals, and it embodies community, ecology, and history.
FIGURE 4 — Enclosure as Disembedding
┌─────────────────────────────────────────────────────────────────┐
│ THE ENCLOSURE MOVEMENT │
├─────────────────────────────────────────────────────────────────┤
│ │
│ BEFORE (Embedded) AFTER (Disembedded) │
│ ┌─────────────────────┐ ┌─────────────────────┐ │
│ │ COMMON LANDS │ │ PRIVATE PROPERTY │ │
│ │ │ │ │ │
│ │ • Shared access │ → │ • Exclusive title │ │
│ │ • Customary rights │ │ • Market alienable │ │
│ │ • Subsistence base │ │ • Profit-oriented │ │
│ └─────────────────────┘ └─────────────────────┘ │
│ │ │ │
│ ▼ ▼ │
│ ┌─────────────────────┐ ┌─────────────────────┐ │
│ │ PEASANT SECURITY │ │ PROLETARIANIZATION │ │
│ │ • Independent │ → │ • Wage-dependent │ │
│ │ subsistence │ │ • Mobile labor │ │
│ │ • Community ties │ │ • Market vulnerable│ │
│ └─────────────────────┘ └─────────────────────┘ │
│ │
│ MECHANISM: Land (nature) treated as true commodity │
│ HARM: Destruction of peasant livelihood and social fabric │
└─────────────────────────────────────────────────────────────────┘Historical Case
The Second Movement: Social Protection
Societal response to enclosure harms:
| Institution | Function | Era |
|---|---|---|
| Poor Laws | Subsistence guarantee | 1601, reformed 1834 |
| Factory Acts | Labor protection | 1833 onwards |
| Trade Unions | Collective bargaining | 19th century |
| Welfare State | Comprehensive protection | 20th century |
These represent the counter-movement against market expansion.
Contemporary Case: Social Media Platforms
Contemporary Case
Digital Commodification
Social media platforms represent a new domain of Polanyian dynamics:
First Movement: Expansion of market relations into:
- Attention (commodified as advertising inventory)
- Social relations (commodified as network data)
- Personal identity (commodified as behavioral profiles)
Key harms identified:
- Mental health deterioration (especially adolescents)
- Misinformation propagation
- Privacy erosion
- Democratic manipulation